2 New Medicare Supplements: What You Need to Know

A number of changes were made to Medicare Supplement Insurance in June. One such change was the addition of two new plan choices known as Medigap Plans M and N.

Since both are considered cost-sharing plans, the insured will be responsible for out-of-pocket expenses over and above those charged for Medicare Supplement Plans C, D, F and G. The insured will also not be tied to any network restrictions for care, as in Medicare Advantage programs. Therefore, the insured will be free to receive care from any doctor or hospital that accepts Medicare patients.

Medigap Plan M could be beneficial for people who don’t anticipate any hospital stays or surgeries in the near future. It may also be good for those who frequently visit the doctor. Other highlights of Medigap Plan M include no co-payments for office or emergency room visits, full coverage of all basic Medicare benefits and 50% coverage of Medicare Part A deductible. It doesn’t cover any of the Medicare Part B deductible or Medicare Part B excess.

Medigap Plan N can be a good option for those who seek low out-of-pocket expenses and no network restrictions. Other highlights of Medigap Plan N include the following: it will be issued on a guaranteed basis with some providers; it fully covers all basic Medicare benefits; there is a $20 co-payment for office visits; there is a $50 co-payment for emergency room visits; it fully covers Medicare Part A deductible; it doesn’t cover Medicare Part B deductible; and it doesn’t cover Medicare Part B excess.

Auto Insurance: Why a Review Is a Good Idea

Doing an annual review of your auto insurance policy may not be at the top of your list of fun things to do this weekend, but it’s important to ensure you have the right level of protection at the best possible price. Following is a checklist to use when reviewing your policy:

1. Have you experienced any major changes in lifestyle or status?

Common examples that may impact auto insurance rates include:

  • Change of marital status, which may entail adding or removing drivers
  • Change of employment status, which could result in a vehicle being used for business
  • Retirement, which might result in reduced mileage discounts, and even the adoption of a pet, which might result in the need for pet insurance

2. Have you changed vehicles or made modifications to an existing vehicle, or has the car reached a milestone?

Common examples that may impact auto insurance rates include:

  • The addition or removal of vehicles, paying off a loan on a car, or acquiring a new loan
  • Changes to the value of the vehicle, which might result in the elimination of comp coverage for older vehicles, or specialized policies for customized or antique cars

3. Have your other insurance policies and/or financial status changed?

Common examples that may impact auto insurance rates include:

  • Changes to insurance and investment portfolios, such as a change of beneficiaries or the addition of an umbrella policy for enhanced liability protection
  • Changes to credit ratings or even the purchase of a homeowner or other policy with the same company, which could end up resulting in discounts and incentives

How to Protect Your Assets …Now and in the Future

Umbrella insurance, also known as an excess liability policy, provides additional protection above and beyond the normal liability limits of a standard policy. In today’s litigious society, a growing number of people would benefit from the ability to protect their hard-earned assets as well as future income via the inclusion of a properly established umbrella policy.

Many people erroneously believe an umbrella policy is only for the wealthy, but research demonstrates that average Americans might benefit more from additional liability coverage then the rich. Rather than risk your home, investments and other personal assets – including future earned income – an umbrella policy provides the protection you need in the event of a lawsuit or other claim.

Although rates vary depending on your personal assets and the amount of additional liability coverage purchased, most umbrella policies are very affordable with average annual rates less than $500 for up to $1 million in total coverage. Perhaps more importantly, it’s simple to purchase an umbrella policy; your agent is often able to add an additional layer of protection at the time you purchase your annual car or homeowners policy.

Deciding how much additional insurance to purchase isn’t easy, so it is a good idea to speak with you agent. At the bare minimum, it is wise to purchase enough to cover your total assets, including future earned income. This is especially important for people just starting out since lawsuits often include a claim on future earnings.

What Type of Life Insurance Do You Need?

Life insurance is often considered essential to individuals who have dependents.

But what kind of life insurance do you need?

If you have a spouse, children or other family members who are dependent on your income, you’ll likely want to be sure they’re provided for in the event of your death – meaning you may want life insurance.

There are many types of policies, but they essentially fall into two categories: term life insurance and cash-value life insurance.

Term Life Insurance

With a term life insurance policy, you pay an annual premium, and in exchange, an insurance company promises to pay a death benefit to your beneficiaries if you die while the policy is in effect.

Cash-Value Life Insurance

With a cash-value life insurance policy, only a portion of your premium is applied to your death benefit.

The remainder is allocated to another component of the policy called the cash value.

Depending on your policy, your cash value could be invested in something akin to a savings account with interest paid by the insurer.

Advantages

Both types of life insurance have advantages.

A term life insurance policy provides the highest death benefit for your premium dollar, which frees up more of your money for other things such as saving for retirement.

On the other hand, the cash-value policy lets you save through your life insurance policy.

Whichever type of policy you decide is suitable for your individual circumstances, you’ll want to make sure your beneficiaries understand your policy’s payout in the event of your death.

Such a payout may amount to more money than they’ve ever seen, so you’ll want them to be prepared to obtain the maximum benefit from any payout.

Why Self-Insurance Could Be a Mistake

Self-insurance is a hot topic, especially for many small-business owners seeking new ways to reduce expenses and save money. But is it a safe option?

Following is some information to help you separate fact from fiction on this timely topic:

Self-Insurance Basics

It all sounds so simple. Rather than purchasing an expensive insurance policy, establish a savings plan so there is money available in the event of a claim. The money accumulates with interest while remaining under the control of the employer.

What Could Possibly Go Wrong?

In recent years there have been a number of insolvencies involving some of the largest self-insurance groups in the nation. During 2006, more than $600 million in deficits were found in New York alone, and that was long before the economic crisis hit the nation. Experts predict a continued rate of default and insolvency among self-insurance groups due to rising healthcare costs and insufficient contributions combined with lackluster returns.

Additional Considerations

A critical concern involves the additional tax burden placed on small-business owners. Current tax law does not allow deductions for self-insurance plans, whereas the cost of providing health insurance for employees is eligible for full tax deductions under normal plans. Another often-overlooked issue involves the cost of building up a sizable fund. Unless a company has significant reserves at its disposal, self-insurance groups are often forced to rely upon a stop-loss policy for catastrophic coverage.

Disability Insurance: How Much Is Enough?

Anyone who depends on his or her income for living expenses should consider purchasing disability insurance. How much income to cover in a disability insurance policy depends on several considerations.

Many disability policies cover at least 60% of the insured’s gross income. But maintaining one’s lifestyle may take more than that.

In fact, it is a good idea to buy disability insurance that replaces closer to 80% of gross income.

Some things to consider when determining the amount of benefit are typical monthly expenses, how long savings dollars could maintain monthly bills and how a disability could affect retirement savings.

With these things in mind, a better determination of the elimination period – the waiting period before benefits begin – can be chosen.

Most disability insurance policies offer elimination periods ranging from 30 days to one year.

Another key consideration is how long the policy will pay benefits. Although many disabilities last 90 days or less, others can be permanent.

Therefore, it is a good idea to look into coverage that will extend benefits to at least age 65.

Keep in mind that if a disability persists for the long term, living expenses are likely to rise. Therefore, adding an inflation protection rider on the policy can help to adjust the benefits for inflation during a long-term disability claim. In case the insured is able to return to work part-time or in another capacity, a policy that provides coverage for partial disabilities should be considered.

This way the gap between the new income amount and the former income amount can be covered.

As many workplace policies are capped, benefit coverage may fall short.

Therefore, even if an individual has an employer-sponsored disability insurance plan, it may be wise to consider supplementing it with an individual policy.

How ‘Weak Links’ Could Cripple Your Business

Starting a small business is risky enough, but during tough economic times the health and operating practices of others can dramatically impact your bottom line. Recent research by The McKinsey Quarterly found that three-quarters of respondents believed supply chain risk had increased over the past five years. The need to identify weak links is clearly becoming a critical element to attracting new business.

Traditional Areas of Concern

In the past, supply chain risk primarily focused on the big three areas of cost, quality and delivery. Although these remain important areas of concern, the complexity of doing business in an increasingly diverse environment has led to the realization of new and emerging threats. Today’s risk management experts must address environmental, legislative, economic and geographic factors in order to derive a complete understanding of supply chain risk.

Examples of Emerging Threats

Think your business is insulated from supply chain risk? Following are just a few of the more common examples of emerging threats that could adversely impact your operations when a critical supplier, vendor or contractor is involved.

Environmental: From natural disasters to man-made crises, the disruption of business or distribution patterns can quickly take a toll, especially for those that rely upon technology or just-in-time deliveries.

Economic: Rampant speculation, a volatile stock market and other economic turmoil in one industry can dramatically impact business in other areas. Everything from access to credit lines to buyouts and bailouts may result in unanticipated changes to your own operations.

Legislation: Perhaps one of the most wide-reaching forms of supply chain risk involves legislation. Zoning, taxes, pollution, tariffs and even exchange rates pose substantial risk, not to mention outright violations or other illegal activities.

How to Manage Risk

Managing supply chain risk may seem daunting at first. After all, you don’t have full control over how others conduct business. However, there are practical steps that can reduce risk without breaking the bank.

1. Establish Operational Standards: Make it a priority to review the business practices and insurance status of suppliers, vendors and contractors in advance. Take time to examine rating and credit data, litigation history and D&B rankings. Insist upon proof of insurance for critical areas or staff before doing business.

2. Have a Contingency Plan in Place:
Do a critical evaluation of core business practices and then search for ways to conduct business in the event of a disaster. Common examples may include the ability to work from home for a limited period of time and sourcing temporary/alternative suppliers and other methods of remaining productive during a crisis.

3. Understand Available Insurance Options: Last but not least, ask your insurance agent about specialized forms of insurance that can provide valuable protection against various threats and supply chain risk. Depending upon your specific industry, there are a multitude of policy options available for almost any situation.